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Customer Loyalty Simulator™
Companies can drive customer satisfaction and loyalty higher and higher by improving quality, reducing prices, and improving service—but this road
can lead to bankruptcy. We believe the goal should not be higher and higher levels of satisfaction, but rather a level of satisfaction that optimizes a
firm’s long-term profitability. Marketing research can assist companies to achieve this goal by quantifying how customers’ experiences and perceptions
of brands lead to future market outcomes such as:
- Brand preference
- Brand endorsement
- Brand purchase
- Brand usage
- Customer retention
- Share of market
- Sales revenue
- Profitability
Decision Analyst’s Customer Loyalty Simulator™ predicts future market outcomes as a function of rational and emotional perceptions of the brand,
its products or services, and its customer service.
The processes involved in developing the Customer Loyalty Simulator™ are:
- Factor Analysis—to determine the underlying factors that summarize and explain the correlations among the many brand,
product, and service perceptions of category customers.
- Latent-Class Regression Analysis—to quantify the link between future market outcomes as dependent variables and the rational
and emotional factors as independent variables.
- Combining Factors Scores and Models—to predict the impact of improved performance and perceptions on future market outcomes
that indicate and produce customer loyalty.
The Customer Loyalty Simulator™ is an interactive model in which simulations for each product or service reveal the impact of changes in customer experiences
and perceptions upon customer loyalty. In the following diagram, impact elasticity is reported by attribute and by factor.
In this hypothetical example, a 1% increase in the rating of “delivery” causes a 0.24% increase in “rational” customer loyalty. A 1% increase
in the rational component of loyalty causes a 0.30% increase in customer loyalty. Customer loyalty is measured as a weighted average of three market outcomes:
sales (24%), preference for the brand (50%), and retention (26%).
Customer Experience Optimization Services
If you would like more information on Customer Experience Optimization Research,
please contact Jerry W. Thomas, President/CEO (jthomas@decisionanalyst.com),
or call 1-800-ANALYSIS (262-5974) or 1-817-640-6166.
Additional Resources from Decision Analyst
Customer Satisfaction & Loyalty Services
Advanced Analytics Brochures
Customer Satisfaction & Loyalty Case Histories
Customer Satisfaction & Loyalty White Papers
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